146 Corporate Finance
The Indian pharmaceutical market was estimated at $3 billion in 1997 in terms of volume consumed.
From the composition of the global pharmaceutical market given in Exhibit 7.1, we can see that the US
market is the fastest growing. The Indian market itself was growing at 15 percent per annum in terms of sales
revenue in 1999. The relaxing of the DPCO, economic liberalization and increases in health care spending is
likely to have a favorable impact on the pharmaceutical industry. The domestic formulation market has the
following segments:
- Analgesics that relieve pain
- Antacids
- Antibiotics
- Anti-tuberculosis products
- Anti-parasitic and anti-fungal products
- Cardiovascular drugs
- Corticosteroids that cure skin problems, asthma, etc.
- Anti-rheumatic products that relieve joint pain
- Vitamins
- Others
Exhibit 7.1 Global pharmaceutical market
Sales-1999 Percentage Percentage
Country ($ billion) share growth
US 81.8 41.3 11
Europe 46.5 23.5 7
Japan 31.5 15.9 –1
Latin America 12.9 6.5 2
South East Asia 13.5 6.8 8
and China
Source: India Infoline.
The Indian pharmaceutical industry, like the global counterpart, is highly fragmented with no company
holding a substantial market share. Ranbaxy, Cipla, Glaxo, Dr Reddy’s Laboratories, and Sun Pharma are
some of the dominant pharmaceutical companies in India.
A couple of years back Glaxo India held a 7 percent market share followed by Ranbaxy (5 percent) and
Cipla (4 percent). Currently, Ranbaxy is the market leader. It has strengths in many therapeutic segments
and has operations in 40 countries with international sales accounting for 50 percent of total sales. Ranbaxy
is currently the 11th largest generics company in the world. Glaxo is a subsidiary of Glaxo-Wellcome in the
UK and has about 20 brands. Glaxo merged with SmithKline Beecham worldwide to create a dominant
pharmaceutical company in the world. Dr Reddy’s Laboratories is another dominant company. Sun Pharma
is ranked 8th in the domestic formulation market. It has a major presence in certain segments like cardiac
care, psychiatry, etc.
Company Backgrounds
In 1935 Khwaja Abdul Hameid, a doctorate in chemistry from Berlin University, set up the Chemical,
Industrial & Pharmaceutical Laboratories, which came to be popularly known as Cipla. On August 17, 1935,
Cipla was registered as a public limited company. In 1944, the company bought the premises at Bombay